Buying an extended warranty for a car is “a poor deal,” according to a new Consumer Reports survey. Most warranties are bought for a driver’s peace of mind, and they usually don’t offer significant cost savings.
Digital Journal — Like any insurance, warranties give consumers a sense of comfort. But what if that comfort hurts the wallet while fattening the pockets of car dealers?
A recent survey from Consumer Reports found that extended warranties for vehicles merely give drivers peace of mind for “repair nightmares that probably won’t occur.”
A survey of 8,000 U.S. respondents found, on average, buyers paid $1,000 and got $700 back in the amount of money they saved in repair costs. Terry Wynter, who owns Terry Wynter Auto Service Center in Fort Myers, Fla., said in a statement: “The odds are that what’s covered won’t fail.”
The Consumer Reports survey also said today’s cars are more reliable than ever, which should give drivers confidence when they purchase a new vehicle.
In fact, it looks like most of the survey respondents are already wise to the dealer’s extended warranty scheme:
About 75 percent of all respondents in our initial screening did not buy extended warranties, with more than two-thirds saying they didn’t think it was a good value for their money.
Even for drivers of a car manufacturer Consumer Reports doesn’t recommend — Mercedes-Benz, whose models rate low in the magazine’s reliability list — customers often didn’t save money with their warranties: only 38 per cent got a deal with the insurance. The average loss was $100.
The report adds:
The sellers of extended warranties know what parts tend to break within the coverage time and mileage, so buyers are betting against the house.
